Stocks to buy

Count on a Comeback for QuantumScape (QS) Stock

Investors of electric vehicle (EV) battery manufacturer QuantumScape (NYSE:QS) have a lot to celebrate in early 2023. QS stock could get a boost to $20 or more in the upcoming months as QuantumScape implements cost-cutting measures and improvements to the company’s production processes.

Suffice it to say, QuantumScape’s stakeholders definitely needed a new, positive update. Sure, QuantumScape shipped out its 24-layer prototype lithium-metal battery cell to automotive manufacturers, but that’s old news now.

Thankfully, QuantumScape recently released a shareholder letter, and it’s not just a review of what the company has already done. If all goes according to plan, 2023 could be a terrific year for QuantumScape and its loyal shareholders.

What’s Happening With QS Stock?

In late 2022, QS stock was barely able to hold the $5 level. More recently, however, the QuantumScape share price broke above $10 and it looks like the buyers are finally stepping in.

Could $20 be the next share-price milestone for QuantumScape’s investors? It’s entirely possible, as the company is making a smart move by planning cost cuts.

This will involve “optimizing non-personnel resources,” including reducing some of QuantumScape’s outlays in services, materials and utilities. There will also be a “rebalancing” of QuantumScape’s personnel, which presumably means layoffs.

Additionally, QuantumScape expects to focus its 2023 capital expenditures (capex) on the “continued buildout” of the company’s “consolidated QS-0 pre-production line.” Hopefully, this will facilitate “increased levels of automation and equipment” for the company’s “new fast separator production process.”

Expect QuantumScape to Improve Its Battery Cell Production in 2023

This year, QuantumScape plans to produce its battery cells more efficiently. Importantly, the company has identified four specific objectives related to QuantumScape’s production processes:

  1. Increase the capacity loading of QuantumScape’s battery-cell cathodes.
  2. Improve the efficiency of QuantumScape’s battery-cell packaging.
  3. Raise the company’s battery-cell production quality and consistency.
  4. Use a new, faster separator-production process.

Bear in mind, QuantumScape is still preparing to transition from building battery-cell prototypes to achieving full commercial production. The company already made significant progress last year in developing its multi-layered battery-cell technology.

So, today’s QS stock investors should be realistic in their expectations for QuantumScape. Clearly, the company wants to ensure that its products will be as high-quality and as efficiently produced as possible.

This is a process that takes time and requires up-front capital outlays. Still, as long as QuantumScape can keep its costs down, the company should be able to achieve its objectives and deliver value to the shareholders.

What You Can Do Now

QuantumScape’s investors must be patient and think years, not months, in advance. This company wants to get everything right the first time, instead of hastily commencing mass production and dealing with major problems down the line.

I believe the comeback in QS stock has already begun, and the lion’s share of the gains will be made in late 2023 and in 2024. Therefore, feel free to buy and hold a few QuantumScape shares with a price target of $20, or even higher than that if you really believe in the company.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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